Abstract. The extent to which workers adjust to labor market disruptions in light of increasing pressure from trade and automation commands widespread concern. Yet little is known about efforts that deliberately target the adjustment process. This project studies 20 years of worker-level earnings and re-employment responses to Trade Adjustment Assistance (TAA)—a large social insurance program that couples retraining incentives with extended unemployment insurance (UI) for displaced workers. I estimate causal effects from the quasi-random assignment of TAA cases to investigators of varying approval leniencies. Using employer-employee matched Census data on 300,000 workers, I find TAA-approved workers have $50,000 greater cumulative earnings ten years out—driven by both higher incomes and greater labor force participation. Yet annual returns fully depreciate over the same period. In the most disrupted regions, workers are more likely to switch industries and move to labor markets with better opportunities in response to TAA. Combined with evidence that sustained returns are delivered by training rather than UI transfers, the results imply a potentially important role for human capital in overcoming adjustment frictions.

Abstract. India has a multitude of environmental regulations but a history of poor enforcement. Between 1996 and 2004, India’s Supreme Court required 17 cities to enact Action Plans to reduce air pollution through a variety of command-and-control (CAC) environmental regulations. We compare the impact of these regulations with the impact of changes in coal prices on establishment-level pollution abatement, coal consumption, and productivity growth. While both CAC regulations and higher coal prices resulted in improved air quality, they operated through different channels. CAC regulations primarily increased the share of large establishments investing in pollution control equipment, and reduced the entry of new establishments. In contrast, higher coal prices reduced the intensive margin of coal use within all establishments, with price elasticities similar to those found in the United States. In terms of productivity, CAC regulations imposed a much higher cost on large establishments. Although CAC regulations were effective at increasing the number of large polluters that invest in “end-of-pipe” treatments, we provide evidence that price-based policies reduced the use of inputs with negative externalities across all firms.

Abstract. This paper considers how input market liberalization affects host country productivity spillovers from multinational corporation (MNC) investments. The standard “Backward Linkage” measure used to estimate technology and learning spillovers to local upstream suppliers– —pioneered by Javorcik (2004) and replicated across several influential papers—–implicitly assumes domestic and foreign firms share the same input structure. I show that this assumption constitutes an omitted variable bias of imported inputs in TFP spillover estimation. Using a novel Colombian firm panel that isolates imported from domestic inputs, mean backward linkage productivity spillovers reduce in half when the share of locally sourced inputs is adjusted to reflect MNCs’ observably higher propensity to import inputs. However in some industries, productivity spillovers increase in response to the adjustment. I demonstrate that the sign and magnitude of this bias are proportional to the elasticity of substitution between imported and domestic inputs. The results highlight how input market liberalization (usually associated with increased FDI inflows) can have important feedback effects on local productivity spillovers from MNCs.